“Invest In Best”- Talent supply management of Indian IT industry

The corporate world is in the midst of a fundamental change. In the next decade, the ability of organizations to manage their global talent effectively will mark the difference between successes and failures. In every sector, an Indian corporation is competing for the right talent. The same is true in the IT industry. The vast majority of outsourcing firms in India is facing challenges in attracting and retaining high quality, high potential employees with critical skills.

Economic transformation and demographic changes have already had an impact on the talent supply and demand scenario. The emergence of a new generation of workers presents an entirely new set of challenges as well. In earlier days, outsourcing was established as a business tool to reduce the operating cost.  However, the recent shift has been towards value addition – innovation and reduced time to market.

The shift in the organizational goal from cost reduction to value addition has brought about a series of changes in the global outsourcing industry.  One rudimentary change is the shift from large value multi-year deals to single year contracts. There is also a paradigm shift in project execution model. Previously, companies were using the traditional waterfall methodology to execute projects, whereas companies now prefer the agile methodology, which allows for much faster time to market.

Furthermore, in order to support agile methodologies, firms are moving from completely onshore models to a mixture of offshore and near-shore delivery models. This also brings various advantages such as time zone proximity, cultural similarity and reduced dependency on a single country or location for project delivery. On the contrary, such a model increases the operating cost as the infrastructure and resource costs are much higher in most countries than those in India, Philippines or any other emerging economy.

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Over time, technology will reduce demand for jobs, particularly at the lower end of the skill set. In fact, the impact of automation on individuals and societies has been profound and the resulting ‘Robot Economy’ could cause up to 75% unemployment. According to Nasscom, the IT and business process management (BPM) sector employs 3.1 million people, including around one million women. At the end of September 2014, TCS had a headcount of 313,757, while Infosys and Wipro employed 165,411 and 154,297 respectively. With automation having increased over the past few years, experts estimate that an IT services company requires only 13,000 employees per$1 billion in revenue.

Furthermore, regulatory hurdles such as H1B visa requirements are ensuring that the talent sent onshore is at par or better than that already available in the US. IT service firms use H-1B workers in offshore outsourcing contracts. However in recent news, H1B workers from India are being replaced by American workers because of their inadequate skills and business knowledge. The H1B visas are given to people with excellent potential. New emerging technologies such as analytics, social media, cloud are forcing firms to focus on higher value projects that call for specialized skills, where not only do the engineers need to understand their technology domain, but also the functional domain they are working in.

“85% of the resumes which we get now are no more relevant. Furthermore, only 50% of the candidates to whom job offers were rolled out join us”- Head-HR, Indian IT services company.

To align with emerging opportunities and to overcome the hurdles in growth, a robust talent management function has become very critical for business. Human Capital is India’s richest resource, especially considering that the services sector contributes to more than 50% of the country’s GDP. The challenges faced by human resource managers in India are naturally evolving with the ever transforming organizational scenario in corporate India.

Proactive talent management has become an imperative in the face of today’s business challenges. The need to do more with less in today’s business environment has placed increasing demands on the workforce to be multi-skilled, flexible and independent. As technology continues to advance, traditional barriers are breaking down with new methods introduced to satisfy increasingly demanding customers, who are expecting shorter product life cycles; the criticality of an organization’s talent becomes a top priority for leaders.

Talent management is the implementation of integrated strategies or systems, designed to increase workplace productivity by developing improved processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs. Globalization of the world’s economies has greatly enhanced the value of information to business organizations and has offered them new business opportunities. As the workforce demographics shift and average employee tenures shrink, the competition for hiring the best candidates is fierce and getting worse every day. The IT companies are shifting from traditional hiring methods to talent based hiring. For example, TCS recently changed its hiring strategy and started focusing on just-in-time hiring or real-time talent management to build a quality talent pool.

A study by IBM found that public companies that are more effective in talent management had higher percentages of financial outperformers than groups of similar sized companies with less effective talent management. In IT talent management, various attributes such as core competence of the employee, personal attributes, knowledge and experience should be considered. Not surprisingly, the IT companies are beginning to follow the strategy of “Invest in the best”.

The first step in talent management is to quantify the talent pool available. The second step is to devise an appropriate value proposition to attract and retail talent. Read more on talent management in our upcoming article – “Need for Talent Management – Talent Supply Mapping and Employee Value Proposition”